Which of the following statements is TRUE? Select one or more: a. Since forward contracts are
negotiated over-the-counter and the parties have maximum flexibility when setting the terms and
conditions, credit and counterparty risk does not exist. Ob. On-balance-sheet hedging involves
taking a position in FX forward or other derivative securities. Oc. Greater integration of global
markets in recent years has increased the foreign exchange risk of banks Od. Directly matching
long-term foreign asset and equity in the same FX currency will allow an FI to hedge or lock in a
profit spread regardless of future changes in exchange rates. Which of the following statements
is TRUE? Select one or more: a. Since forward contracts are negotiated over-the-counter and the
parties have maximum flexibility when setting the terms and conditions, credit and counterparty
risk does not exist. b. On-balance-sheet hedging involves taking a position in FX forward or
other derivative securities. c. Greater integration of global markets in recent years has increased
tri] foreign exchange risk of banks d. Directly matching long-term foreign asset and equity in the
same FX currency will allow an FI to hedge or lock in a profit spread regardless of future
changes in exchange rates.
